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tv   Closing Bell  CNBC  June 27, 2014 3:00pm-5:01pm EDT

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composite. we are seeing strength today in utilities, a back-off in energy as oil is backing off of today's session. remember, rebalancing, so could be dicey. >> we'll catch you tonight on "fast money" and "options action" at 5:00 p.m. eastern right here on cnbc. >> "closing bell's" up next. and welcome to the "closing bell," everybody, on this friday. i'm kelly evans at the new york stock exchange, where we could be in for a volatile final hour. we've got the annual rebalancing of the russell indexes at the close, bill. >> kind of like the world cup at the new york stock exchange. it's one of those days. i'm bill griffiths here at cnbc headquarters. the rebalancing will occur at the last minutes of trade today, could make it one of the biggest trading days of the year in terms of volume. so, stick around. could get interesting here in a hurry. in the meantime, investing
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legend bill miller. we'll discuss his long bullish eye on amazon. he recently called the company the best run in the world. >> and we have david faber on that coming up as well, looking forward to that. here's how we've done so far today. a bit of volatility here and there, but for the most part, just down 48 points on the dow jones industrial average, now trading at 16,798. 17,000 a mere 110 points away. we've got the nasdaq up, though, up seven points. the technology stocks doing well again today relative to the other blue chips, and the s&p is down 2 1/2 points right now, trading at 1,954. let's get to our closing bell exchange for this friday. rich peterson from s&b capital iq, joe duran from united capital, diane jaffray, mr. arthur cashin from ubs joins us, and we are always pleased to have rick santelli with us as well. arthur, we talked in this program yesterday around this
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time about the futility once in a while, trying to assign meaning to day's activity in the markets here. but you know, let's face it, there are crises in the world that in the past might have affected the market, but they don't seem to be doing it right now. do you have a meaning for that? >> well, it may be that there are a couple of things going on. with these investigations happening, some of the high-frequency traders may have decided that discretion is the better part of valor, and they're not playing. you have certain other sectors that may have stepped back. and you know, some of the people said, you know, we had an okay first half of the year. maybe we can switch out of equities and into, perhaps, yielding instruments and see where they go. so, i'm not sure all the players are on the field right now, and that may be helping to distort things slightly. >> rich, what's most encouraging
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to you in this market? >> not all the players are on the field going into the holiday period next week with a shortened trading period. we look forward to the jobs numbers on thursday being reported on, and friday, the fact that we have 200,000 new jobs, that will be the 50th consecutive month of over 200,000 new jobs. gains in the s&p 500, this is a stretch since the mid-1990s, i believe '95 to '97, the growth for the s&p 500. earnings look good. i think we had gains from nike earlier this week. we saw better-than-expected housing numbers. obviously, the gdp numbers earlier this week, negative 2.9% was sort of a downkick, but the market is shrugging it off. it's a big market and someone has to buy it. >> joe duran, even though we hover close to all-time highs for the dow and s&p and 14-year high for the nasdaq, you can still make a case that this market is inexpensive, yes? >> i think with what we've seen of this incredibly low interest
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rate environment around the world, i think we have a bubble in interest rates, and that's creating a lot of opportunity for people to refinance. and the amount of debt burden people have it lower than it's been since the early '80s as a percentage of income. that's supporting real estate, which is the biggest driver of spending in america and with consumers. so, it's hard to be too bearish, except for the fact that there's a lot of complacency, and on the short term, it just feels a little fluffy, but as long as interest rates stay where they are, i think that's where the big risks lie. equities are expensive, but frankly, given where they are, they continue to look like the best game in town. >> joe mentioned real estate and kb homes is up after better-than-expected earnings. we're seeing signs of life across the housing sector, even as the concern has been that this is losing momentum. >> you're exactly right, kelly. inventory has come down. earnings for lennar and kbh are
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better than expected. we think we're due a second run in the homebuilders. >> really? how much further do you think they can go? >> they still have significant upside. >> the fund that you're manager for is the relative value large cap fund. homebuilders would seem to me to fit none of that criteria, but perhaps they do. >> relative to history, their price to books is still attractive and lennar recorded an increased book value this summer, given that it was a moderate selling season. >> and rick santelli, i'm hearing a bond bubble right now. what do you think? >> i think it's very fascinating, because the treasury complex in some ways is nervous about the fundmentals of the economy based on the federal reserve and zero interest rate policy. now, if i take mr. duran's comments, should the bubble pop, i certainly wouldn't think that a long equity position's going to fair very well, personally. >> right, right. >> i just remember what happened
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when there was credit anomalies in a world that's based on repos and short-term funding and commercial paper. so you know, you're damned either way. but i will point to the fact that one of the big stories today, there's so many subsets of why investors buy treasuries, and the newest subset is not new, but it's new in terms of the intensity of the conversation, exit fees being tied with the shortage of treasuries, maybe because of the big ownership of the federal reserve and the repo market, and it all makes perfect sense. and the band plays on. there's a lot of reasons to think interest rates may go up, but in the immediacy of the next couple of quarters, it just doesn't seem like a good bet. >> yeah, that was a little bit troubling news. can we talk a little bit about what to expect when the bell rings today at 4:00? what does this mean? what are you hearing? >> well, the rebalancing will be very large. viewers should expect to see several hundred million shares trade between 4:00 as the bell is ringing and about 4:10 when
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the runoff proceeds. on an ordinary day, people put orders in for market on close. and what happens there, kelly, is they kind of wait in a small queue. when the bell begins ringing, the market makers begin executing them, and usually on a normal day, we have 100 to 150 million shares. you could see upwards of 500 million done today because the rumors are that anywhere from $40 billion to $50 billion worth of transactions may occur. >> do you think it's going to live up to that billing, $40 to $50 billion? >> i think we will certainly see probably double what the volume is when you have it going in. right now, the early look -- and the viewers should be very careful with this because there is a little game-playing, people can always cancel, but it seems to be tilted slightly to the buy side. and with an order of a billion,
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maybe close to 2 billion shares. >> okay. >> art -- >> i'm sorry, $2 billion. >> arthur, those folks who have been around the block a few times on wall street often look to history to try and find a correlation, try and make sense of what's going on right now. does this period of time we're going through of low volatility right now, that's been a hallmark of trading the last several months, does this remind you of another period in time and can that help you figure out what's going to happen from here? >> well, we've had several of these periods. the difficulty is, you know, everybody who's got their own little ax to grind will find a period that then evolved into what they've been preaching about. >> right. >> and you will hear a good deal of people saying that this much calm and complacent market will spring out in a negative fashion. that's certainly been true in some of the recent past, but there were stretches back in through the '50s and '60s where you had relative calm in the market followed by a rather better market.
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so, i don't think that the record is clear enough that we could extrapolate from it. >> and what's interesting, we've had six quarters in a row where the s&p 500 has rallied. first or longest such stretch through the '90s, but that period went on for a 14-quarter run. so, it kind of reminds me a little bit about what robert shiller was saying the other day, which is that, you know, you can kind of look at how remarkable valuations are or how the market has been on a relative basis and could see it still has room to grow here. >> the punch bowl is still there and the punch bowl is being filled by the accommodation from the fed. the fact is, as you look out to the second quarter earnings expectations, ex-financials over 8%. look at the third quarter, ex-financials are going to be burdened by litigation costs, mortgage charges, over 10% in financials. but for the full year, looking at about 7% growth from a record level in 2013. so, you look at valuations a year out, and our 12-month --
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actually, our targets were 2015, 2,100 on the s&p 500. as well as earnings keep going, the stock market should be edging higher. >> and it's not just the fed. 56% of the global economy is operating at a zero-rate environment. >> wow. >> any rate hikes that happened are incremental. there's no ratcheting up. i mean, in may of 2013, we went from two on a ten-year to three at the end of 2013. you know, the market still rallied. >> but joe, some have said, looking back on that temper tantrum, maybe that was the move in the bond market. maybe that was it. >> i don't think that's it. i think the big question, to address what rick was saying, is what drives rates higher? is it an aversion to risk and not willing to lend money at these rates, or is it the economy's growing and we start to get some actual, not just asset inflation but actual inflation. and that is the big dilemma. it's either going to make
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equities a great place to be or a dreadful place to be, and it really derives around is the economy actually going to get top-line growth? but a dreadful first quarter. it doesn't look like we'll hit 3.5% growth in the economy. it's almost impossible. and so, the question is, what causes rates to go higher, should it happen? and i'd add one other thing. the market did nothing for a decade. that was basically flat for 12 years. so, there's plenty of room, because we've done nothing for a very long time -- >> well, there were some ups and downs in there. >> but japan's quite happy. they have huge amounts of inflation. i want to talk to the bank of japan in five years, see how they enjoyed the ride. >> yeah, there you go. thank it all. >> put it on the call sheet. thank you, guys. >> art, thanks as always. see you later. all right, how are you, ms. evans? >> bill, you missed cake friday. >> oh, and there won't be many more. i think some of those guys are leaving, i guess. >> yeah, i know. >> we're going to talk amongst ourselves for a moment here.
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we don't get to see each other anymore right now. 15 minutes left in the trading session. the dow is down 41 points, but again, we're heading towards the rebalancing of the massive russell indices, and we could get some volatility. we're certainly going to get a lot of volume at the close here. >> a reminder, bill is in englewood, co-hosting "the nightly business report" tonight on pbs. don't miss a moment of that. >> thank you. have another piece of cake on me. coming up, legendary fund manager bill miller speaking with us exclusively. wait until you hear if he's still banking on financial stocks hitting it big. we're going to talk to him about amazon, maybe toss him a question on homebuilders as well. >> plus, find out if bill's still bullish on amazon, which he pumped up right here on "closing bell" just before father's day. tough year for the online retail giant right now. so, feeling hungry? add amazon to online meal delivery services, like grubhub. david faber has a report on amazon's ever growing empire. we'll be right back.
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yeah, citi mobile. pay the dog sitter? and deposit that check? citi mobile. pack your bathing suit? wearing it. niiice bank from almost anywhere with the citi mobile app. welcome back. mixed day on wall street today. technology's doing pretty well. the nasdaq's up ten points right now, the dow down 36, off the lows of the session that was set about midday today. and once again, if you've just
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joined us, there will be a rebalancing and some buying and selling of the components of the russell indices coming up on the close today, so a lot of volume, could be some volatility as well to look forward to. kelly? and already a couple standouts in this market. dominic chu has the big movers. >> you can't talk about movers today without getting or at least mentioning goprocee. it's day two of its public life, up pretty big. on today's session, up 16%, and that's off session highs. that's after racking up a 31% gain yesterday, its first day as a public company. even with this afternoon's pullback, gopro shares are still up 50% from the ipo price. that's a big deal, at least to gopro shareholders. on the down side, dupont falling 4% and accounting for a third of the dow's decline today, even though we're getting back off those lows. dupont has cut its profit guidance, blaming weakness in its agriculture business. finally, we'll end here on amazon, which is edging lower as it prepares to expand its local
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offerings with a food takeout service that looks a lot like grubhub, a lot like sceneless, so another big competitor getting in on a slightly smaller competitor, we'll call it, in that marketplace. back to you. >> amazon's transformation into one of the world's largest online retailers began with books. >> yes, it did. david faber joins us now to preview his special documentary about amazon. it's called "amazon rising" and premieres this sunday. good to see you, david. >> good to see you as well, kelly and bill. of course, amazon now offers an array of astounding products, selling books though still a key part of its dna, given its history, as you mentioned, of having started there. as it has gained power in selling so many things, it always continues to press its advantage and play business hardball. i talked to publishers about doing business with amazon and within that amazon oouuniverse they tell me it can be a tough place to get anything done,
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including making profits. >> they control the marketplace. they're the big guy. they're the big kid on the block. you can't piss them off. >> they're a huge gorilla. >> reporter: for dennis johnson and david goedine, book fairs like this one are a battleground. >> we have people who come here with their cell phones and they'll scan the barcode of the book and they'll compare the price i'm charging to what they could get it for at amazon and they'll walk away. >> reporter: amazon accounts for a third of both godine and johnson's sales. when you get together with other publishe publishers, do you guys talk a lot about dealing with amazon? is that a subject? >> we do. >> reporter: at his melville house imprint in brooklyn, johnson told us what happened when he crossed the online giant. >> we were asked to pay additional money, which would have put them getting a total discount beyond what we thought was not only workable for us but legal. so, we protested and refused to pay it. >> reporter: and what happened?
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>> our books were pulled off of amazon until we did pay it. >> of course, most publishers are not even willing to come out publicly, but recently in public, of course, has been the dispute between hachet, the large media company that owns a number of publishers and amazon, with stephen king, j.k. rowley, james patterson, who we spoke to for the piece as well, all of whom are having a very hard time selling their books on amazon, because right now amazon is making it very hard to get delivery of those books as it tries to get hachet to bring down its price of its own offerings for amazon. >> do you sense an arrogance within amazon now with this hardball they're playing that could come back to haunt them? >> you know, i do wonder about that, bill. and you wonder if public perception of the company's changing at all. so many people are delighted with the service, of course, every single day and how quickly they get things and the incredible diversity of products available, not to mention the price. but i do wonder whether that will be the case, whether there is a good amount, perhaps more
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hubris now. it's always in their dna to push their advantage. by the way, they're not looking for higher prices, they're looking for lower prices. >> right. >> so, their claim would be, we're only looking out for the consumer, but many people say books, at the very least, where you started are different. it's not like selling any other commodity. >> david, thank you for now. a lot coming up in this documentary. catch the premiere of david faber's "amazon rising" this sunday at 9:00 p.m. eastern time. >> looking forward that to that very much. 40 minutes left in the trading session here. see how we are doing as we head toward the close. the dow down 40 points. maybe it is a tightly coiled spring ready to go here as we get ready for that rebound i'm seeing at the top of the hour. time warner clocking its best level since december of 2001, just one of the many media companies that's enjoyed a banner year. we'll speak to a couple pros coming up and see how long the industry can stay hot. also, the situation in iraq and the effect on oil prices. the u.s. sending armed drones
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welcome back to a mixed session on wall street so far with the nasdaq actually up 0.25% while the s&p and dow are giving up ground. the russell will rebalance as it does every year. >> markets also watching the middle east, where u.s. drones are now flying over baghdad as the crisis in iraq escalates, this as we now learn, apparently the insurgents don't likely have nearly as much money as
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originally thought. michelle caruso-cabrera, what's the latest there? >> hey there, bill. remember last week there were reports the isis insurgents stole $400 million from a bank in iraq and that they may be worth as much as $1.5 billion from their oil sales in the seized wells in syria? nbc news reports it's not true. citing sources in the u.s. intelligence service, it's believed isis stole millions of dollars, not hundreds of millions of dollars, and analysts also don't think isis has enough money to control the vast swath of iraq and syria that they've taken over, a scenario of 8,000 people in an area the size of wyoming. if you focus in on just the part of iraq they control, that area is used to receiving $12 billion out of iraq's annual $120 billion budget. roughly, $1 billion a month from baghdad, covering food subsidies, government salaries, hospitals, among other things. those payments have now stopped. former ambassador charles reese, who is now at the rand corporation, says isis doesn't
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get enough revenue from other operations to make up for that. >> while isis is quite entrepreneurial, they are doing kidnappings and they are robbing banks and they are charging taxes on trucks crossing their territory. but $500 million to $1 billion a month is quite a large overhead cross of maintaining the population. >> and as we mentioned, isis does control some oil in syria, but the revenue from those wells not nearly enough to support the sunni territories in iraq. you can read more on cnbc.com. guys, back to you. >> and michelle, just before we let you go, wouldn't this be a worrisome development, potentially, if it leads to more kidnappings. >> sure. >> the typical way isis has been raising money? >> sure, or if the sunni population isn't used to getting the payments, they could be going to other parts of iraq. the u.n. has documented huge displacements already.
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>> michelle caruso-cabrera, thank you for now. crude oil was down today, despite the latest turmoil, but it's been on the rise since isis embarked on its mission to destabilize iraq. gas following a similar path heading into the travel season. >> joining us, chris faulker. we get mixed reports on exactly the impact all of this has had on the supply out of iraq. we've heard from people who say it's had no impact and that oil has no business going as high as it is right now. you beg to differ on that, though. why? >> look, i think that we have about $10 to $12 built in right now as a premium because of the isis situation, folks thinking that isis could make their way down south to basra, where about 2.5 million barrels of oil are exported out of iraq every single day. i think now the market is responding, thinking that may not be the case, and i think the $10 to $12 premium was full-fledged civil war in iraq. so, i think we might see oil
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retreating just a bit as folks think now isis might be contained in the areas where they're in currently. >> what about the longer term damage this has potentially done to iraq's supply of oil, which was supposed to be the bulk of the opec supply coming on the market over the next five to ten years? >> i was in iraq in december and it was unstable then. i think now things have gotten worse. this is going to be a big year for iraq. there are 4 billion barrels of oil a day, they're at 2 1/2, targeting 9. >> 9? >> 9 million barrels a day is a huge amount of oil. if we lose that production, the elastic production in saudi can't make up for that, so we could see oil prices surging if they were to get toward the basra region. that's yet to be seen. 30,000 troops in iraq protect that region. >> even now if that worst-case scenario is taken out, which, obviously, we'll only find out as this carries on if that's the right assumption or not, but for the longer term, do you think this has dealt a serious blow to iraq's ability to meet that increased production target that has been priced into the market?
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in other words, could prices be structurally higher because of that, even if they come back off -- >> look, i think iraq's been damaged. it's not stable, major stability issues. this draws the picture very clear that iraq as major issues. to make it to 9 million barrels, maybe, but not with the situation they're in and with the infrastructure challenges ahead. i think iraq is at 2 1/2, 3 million barrels, lucky to get to 4, unless something else changes. we left iraq in 2011. it wasn't stable then, and i think things have gotten worse now, and i don't think things are going to just tomorrow go back to the way they were. i think we'll continue down a road that's not in a positive manner at all. >> and for that reason, we've talked on this program for the last few weeks of the impact this could all have on u.s. energy policy. obviously, you're a big fan of wanting to increase production in this country, release the keystone pipeline and so forth, but do you expect, trying to be as objective as you can, that this could have that kind of an impact on the administration? >> look, i think it's obvious
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the united states needs to be energy independent. we need to shield ourselves from a lot of this stuff going on in the middle east and the volatility. the keystone's a no-brainer. it's been a no-brainer for almost six years. i don't know why we still haven't been abe able to deal with that. allowing the definition of condensate to be a process -- >> we've had people from the administration on who insist there was no change in policy. >> look, the policy was altered from the word process, making that condensate is considered a process because it goes through the stabilizer through the head and purize it, so they made it a dislate fuel. >> it is a change. >> it got killed on the news. >> all refineries will. >> there's a rational reason for that, in other words. >> sure, because they want cheap feed stock. i think this is one step short of a full export crude ban being -- >> you think it starts something
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bigger. >> i think it starts a conversation, which won't happen overnight, but we should be exporting condensate today and that's starting to happen. an administration will not go from "a" to "z," exporting crude oil overnight, but i think it starts the conversation. and i think we saw in september, we saw oil gluten up in the coast and we had to discount oil 12 bucks off brent. i think it woke people up to, look, if you want this party to continue, we need to be serious about this. >> i know we have to go if we allowed tomorrow the u.s. as much export crude as they would like, wouldn't the price for our crude go up immediately? >> i don't think so. it's a worldwide given commodity. you can't base it on gasoline prices in the u.s. it's gasoline worldwide. oil is coming online. look, will it be a lot cheaper than it is today if it wasn't for all the volatility in the middle east. our oil production is surging. if we were 8.6 million in iraq and all of the libya and nigeria stuff wasn't going on, oil would have already come back down. i don't think it will impact it in a major way. >> thanks. appreciate it. 30 minutes into the close here.
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let's switch from oil, take a look at how markets are doing, and the dow still off 30 points as the nasdaq does try to hang on to positive ground here. it's up 14. they are back and they are bigger than ever, i am told. it's "the transformers." we're not talking about electrical, we're talking about a movie. if critics hate or love this fourth installment of the media series. we'll talk to media pros next to see if viacom, the studio's parent company, is itself transforming the stock to his buy list. also ahead, bill miller will share his list of stocks to own right now, and you may be in for a few surprises. don't go anywhere. you? just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline.
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built for business. all right, 25 minutes left. we're starting to see the market perk up a little bit here as we head toward the close and this rebalancing that is going to be taking place within the massive russell indices. the dow now down just 14 points. the nasdaq's moving higher, up about 17. and the s&p up almost two points right now. now, all day we've been giving you the outlook for the next six months. >> yes, and now we want to talk media, so let's get some predictions now from cnbc's julia boorstin. >> here's what to watch for in the media sector in the second half. the music and video streaming wars are sure to intensify as
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amazon, yahoo! google and others ramp up their music and streaming tv options. speaking of streaming, we can expect the if he cfcc to settlet neutrality debate. youtube battles comcast and time warner cable about paying for faster speeds. and get ready for more merger and acquisitions as media giants look for more digital growth as disney did with their purchase of baker studios. that's your "second half media outlook." i'm julia boorstin. >> all right, so against that back drop, which media stocks are poised for a great second half of the year? let's bring in a couple analysts. >> david nelson from bellpoint asset management and jason moser from motley foal. good to see you both. >> good to see you. >> david. >> there's consolidation in the industry, always the disruption of technology. you hear content, distribution, so forth. what are the trends you see for the second half of this year? >> well, we just got past a big
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hurdle. obviously, we saw the supreme court decision against aereo, and that's good new for the industry. and most of the stocks are up on that for pure play. cvs, which i don't own, was up the most on that, but it's not a name that i own right now. it's not a name i'm looking at right now. >> jason, where do you see the most opportunity? >> i'll tell you, one opportunity that i see just seems every quarter in and out is walt disney. i just got back from taking my family to "maleficent" the other night, thinking they knocked it out of the park again, but the movie studio only accounts for about 8% of the company's profit. it's like cable networks like abc and espn and really the crown jewel at espn that brings in about 65% of the operating profit. and sports is obviously a realtime dynamic that i think they're going to continue to exploit, and i see no reason for disney not to perform well over
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the second half of the year. >> david, you also like disney. >> i do. we're going to have a lovefest here around disney. i've always loved the mouse. how can you not love the mouse? >> you love the mouse! >> but i think he hit the nail on the head. sports is where it's at the disney. and you know, we live in a dvr world and we time-shift everything, but when it comes to sports, we want it in realtime. i don't think you can watch "monday night football" on tuesday on your dvr and get the same effect, and that's great for programming, it's great for advertising as well. >> and people are even remarking on the picture and picture offerings for the world cup streaming on espn.com. all right, jason, so what else? >> well, i think you maybe have to look at something many people might not consider a traditional media play today, but amazon.com, which has gone beyond, well beyond just being, you know, america's biggest book store. now, i mean, they're offering all sorts of different video offerings with their prime service, producing and developing their own content. i think that the deal that amazon signed with hbo to bring that content over to their prime streaming service was genius,
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because essentially, now they're giving prime members an hbo subscription for firstally nothing. i mean, it's an $8 a month subscription cost for the prime membership. so, between that, and then look at the fact that with an amazon relationship, you can actually get a la carte movies to rent or purchase, and it's rounded nicely with the fire tv device, which i think will prove to show some modest success. and just as someone who has used the fire tv device, i think it works very well. so, i think when you look at amazon today, the bets that it's making and the money that it's spending, it's definitely becoming more of a media company every day. and jeff bezos is a ceo that you just are crazy to ever bet against. >> all right. and david, you've got a more traditional pick in viacom, which has kind of lagged this year, hasn't it? >> it has. it was a great performer last year. and viacom admittedly has some hair on it. they've had some troubles with nickelodeon, but i think it's priced for that. i think for your viewers, one of the things to focus on is for all intents and purposes, management is taking this
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company private. 30% of the float has already been taken in. $850 million last quarter, $3.25 billion for the year, and they still have $8 billion left on their authorized purchase here. so, i think that spells higher prices for this name, and it's trading at 14 times next year's. >> i love the point that you brought that up because we're seeing the effect across the market, but is it fundamentally a bullish sign, if as you say, they're spending a lot of capital to buy back a lot of shares? it's one way to keep a floor under the share price, i guess. >> it keeps the floor -- to keep another point, a lot of people buy viacom because of the dividend, and by buying in those shares, it lowers the cost of that dividend, so it could possibly raise it further. i think it's a real capital return story. >> the tax incentive is also pushing a lot of people to pursue a buyback over a dividend, but they do both. >> thank you, gentlemen, for
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your opinions on media stocks. news alert on at&t. michelle caruso-cabrera back with details on that. >> also, watch for an announcement after the bell today related to at&t's 8.3% stake in amx, america movil, controlled by carlos slim in mexico. there are reports that carlos slim is going to buy back that stake. remember, because at&t wants to do the directv acquisition, they have got to divest their stake in america movil because america movil has a relationship with dish network, so there was a question of what was going to happen. at&t moving off the lows of the session, not a big mover compared to amx, which has shot up sharply higher. watch for a possible announcement after the bell related to more specifics on what is going on here. guys, back to you. >> michelle, thank you very much. 20 minutes left in the trading session and we are continuing to move glaraurlly higher on all t major averages.
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dow's down, the nasdaq is up 17 1/2 points with the s&p up two. >> the s&p has turned positive, and as art cashin pointed out top of the hour, there are a lot of people anticipating buys, or significant buy orders on the close. that could be one reason why we're seeing a comeback. of course, we just have to see what exactly happens when the bell sounds. are auto stocks facing an uphill battle in the back half of the year, especially general motors? our phil lebeau will drive by an an update. and "meet the press" moderator david gregory tells us what he thinks about the reported icy relations lately between the obamas and the clintons, coming up. ♪ about speeds and feeds. it's all about latency. it's all about how fast does it run. i often sit with enterprises who ask me about how mission critical and how's the performance of the cloud. and i tell them, if you can make gamers happy, you can make anybody happy. speed is made with the ibm cloud.
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welcome back. heading into the close now with two out of the three major indexes in the green. the dow lagging, but only barely, bill, as people again anticipate what could happen on the close. >> yep. hitting buys that arthur cashin was pointing out earlier. we've seen breakdowns in biotech, social media, internet stocks, wondering whether semiconductors could be next. >> seema mody has the breakdown from the nasdaq. >> that's right, other areas within tech have seen this reset in valuation, but semiconductor stocks, companies that power smartphones, tablets and pcs
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with chips and memory devices, they've been able to overcome broader market volatility, the sector up about 17% over the past year. but some market participants believe this group of stocks are due for a pause. the index on track for its first weekly decline in nine weeks. technical analysts at mpm partners say expect further consolidation as the semis are the most overbought since the tech bubble in 2000. goldman sachs also cautious, writing that semi stocks are trading in "dangerous territory." but some see further gains. b. riley analyst craig ellis telling me that the fundamental story for chips remained favorable, thanks to the adoption of smartphones in emerging markets and the lure of the dividends some of the stocks paid. in fact, the average dividend yield of semis is in line with the s&p 500 at around 2%, so that might be a way to play chips, especially if rates do, in fact, stay low in the near future. kelly and bill? >> all right, seema, thank you very much. 15 minutes left in the trading session here. what do you think, finish
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positive for the dow? it's the only one of the major averages still negative, but just by a fraction right now. >> we're watching it closely, that's for sure. i can feel the anticipation building in here, by the way. >> is that what i'm feeling? >> yes. it's not just that friday feeling. much more ahead on the markets is coming up, including bill miller, and how about cruising in on one of these this summer? there it is. the ceo of thor industries, he's going to tell us if he sees a jump in consumer spending on big-ticket items. and we might just, well, maybe we'll circle the block in this baby. we'll be right back. >> i'd like to see you take that down broad street. >> i want to live in that. she keeps you on your toes.
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coming up on the last ten minutes of trading, and in fact, the dow has now turned positive. this biased to the buy side that arthur cashin was talking about, about an hour ago, as a result of the rebalancing that's going on in the russell indices has turned out to be a reality. we are positive now in all major averages here. joining me, independent investment consultant david dorst and james liu from jpmorgn funds. david, we're already looking to the second half, what trends do
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you see and how are you positioning yourself? >> look at profits. you want to see with the slowdown in the first quarter, how are the numbers going to look for the second quarter? one thing of concern to me, as you saw, the personal consumption number which came out yesterday, only up 0.2%. so, that's profits. number two is iraq. you want to see iraq and its effect on the oil price, bill. number three is "t," treasury bond yields. and the treasury bond yields are frighteningly low. the 30-year bond right now is at a 3.35% yield. that is very, very low. it is saying something that's inconsistent with the way the market's been acting. and finally, oil, is the oil price, and the european central bank, that's the "e," is the european central bank. are they going to, in fact, add stimulus? bill, this month, the banks in europe are down 5%, whereas they're up 4% in the united states. so, they're acting well, as well as the small caps are acting well. so, the market continues to want to lift and see this, the glass
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is half full, rather than half empty. >> to this point, yes. james, you're the global investment strategist there at jpmorgan funds. what opportunities do you see overseas in the second half of the year? >> i see a lot of opportunities. europe, manufacturing activity is still doing well, despite perhaps lower gdp numbers. you see the same thing here in the united states. i still like the developed world, generally. if you look at emergent markets, if you have that longer time horizon and can really ride out volatility later on this year when central banks normalize their policies, at least here in the nalts, maybe the bank of england, if you have that longer time horizon, emerging markets make sense in a diverging portfolio. >> china's growth rate has been a question mark the first half of this year. what do you think's going on? >> their growth rate has been in question. gdp growth rates rates are slower so far this year, but if you look at manufacturing activity, that's picking up. if you look at loan growth, actually, things are turning a bit more positive in terms of slowing down the massive amount
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of credit that's been building up in china. so, i still think it's part of a diversified portfolio. i think we still watch it with caution. and i wouldn't be massively overweighted right now. >> you've been a fan of japan for a long time. are you still? i would imagine. >> yes, we are. and you know, japan is up 5%, bill, you've seen that this month. it's coming on, it's closed the gap from being down about 8% for the year. the msci index, which is not the one in dollars, the msci index is down 1%, so it's had a very, very nice rally. now we need to see further action on the structural reform front by mr. abe. that would lead -- so, he's talking about taking corporate taxes down, as you know, from 35% down to 30%. more structural reform things like that will help japan continue. it's been all done, all the heavy lifting's been done by the monetaries' side, by the cheaping of the currency, by the
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huge expansion in the bank of japan balance sheet, bill. so, you need to see the structural reform. where's the beef? show me the money. so far, it's been good, but let's see what the second course is, the second helping. >> what do you think of japan, james? >> i think, i agree with david. i think the problem is that most of the gains that we've seen in japan, up 80% in the course of 2013, were mostly on the banks of qualitative and quantitative easing. essentially, we prethe playbook in the united states, they borrowed it and they did well with it. i'm not sure they have structural reforms in place. they put out proposals last week and they're pretty much in line with what was expected, maybe a little lower. until they have a plan to fix the economy, i'm not sure i would be overweight japan at this point. >> we'll takebreak and come back with the closing countdown, see how we do with this rebalancing. and bill miller will give his take on the markets right now, the financials, amazon, which he's been very high on lately, and a whole lot more. you're watching cnbc, first in business worldwide. ood
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[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. heading toward the close, about 3 1/2 minutes left in the trading session. see how we did this week for the dow. remember, we had that revision to the gdp number for the first quarter, that big minus sign, 2.9%? caused a little bit of volatility. we show you the dow and how we did this week. we are finishing sort of flat
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for the week here, but we're up four points right now. same thing on the ten-year yields. some volatility midweek as a result of that revision in the gdp number, and we're finishing out the week at the low end of the range at 2.53%. let's see how the russell's doing as we do go through this rebalancing here. the 2000 is up about eight points right now. bob pisani is joining our group right now. explain what's going on. >> every day, the russell indexes rebalance. there are many russell indexes, but the russell 2000, the small cap, and the russell 1000, the big cap. a lot of money to these indiceses, about $5 trillion in the russell. so, there are thousands coming in and out and those in, like the s&p rebalancing, to the russell indexes have to buy and sell the various indexes going in. delphi automotive is behind me, coming out of the russell
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indexes because it's considered domicile in the uk. some are coming in from outside the united states, so there's a lot of movement. you can see guys lacking at the stocks and trying to figure out. all the action's going to come in the next two minutes. bill, we had 400 million shares changing hands here on the floor of the new york stock exchange up until a couple minutes ago. i wouldn't be surprised if we got 800 million to a billion. we may do 400 billion shares. it sounds remarkable. we'll double the volume for the entire day in the next two or three minutes, but there will be an avalanche of orders coming in just in the last two minutes. we'll see how that shakes out. >> and next week we have a shortened week because of the fourth of july on friday, and it's a half trading day on thursday as a result, too. >> bill, you've got ism manufacturing and non-manufacturing. it's a short week, but a very data-heavy week. you've got motor vehicle sales, you've got chicago purchasing manager's index. so, you're going to see, i
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think, a lot of indication as to whether the underlying economy is still strong or not. happy 238th birthday united states next friday. >> let's not forget, of course, the jobs number. i believe that will be thursday. >> 200,000. >> it will be a very unusual day, thursday for the jobs report. >> 200,000 plus is what i'm looking at, which would be five months in a row above 200,000. >> and james lu, certainly keeping an eye on the middle east and what's going on over there and the impact on the price of oil. what do you think of that region right now? >> absolutely. i really think it's great to see the exchange come to life. i think we should rebalance more often, if that's what it takes to get volumes up. in the case of volatility in the markets, i think syria certainly is causing volatility, isis in iraq are causing volatility. what i'm trying to tell my clients who are mostly long-term investors, volatility up or down 60 basis points in a single day is not unexpected. let's balance out the complacency we've seen so far with a sense of composure. >> all right. >> it's true that oil prices are
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up, but markets can still do well, even at higher levels. >> very good. thank you all. have a good weekend. coming up, the legendary investor bill miller joins kelly and the rest of the game on the second hour of the "closing bell." see you later. have a good weekend. and welcome to "closing bell," everybody. and what a big friday it's going to be. i'm kelly evans. here's how we're finishing up the session on wall street, but with the sound of that bell, that's to some extent when the action here's going to begin. so, the dow jones industrial average turning green in the final moments, up about 4 points, the nasdaq adding 18, and the s&p 500 adding about 4 to close at 1,960. we heard from art cashin at the beginning of last hour, we could have $1 billion to $2 billion more worth of buy orders on the close because the russell is doing its annual rebalance. unconfirmed, but again, i can tell you there are upwards perhaps of $2 billion coming into this space on the bell, so we'll see as we close here just
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what kind of effect that's going to have. it could take a couple more minutes for all of it to shake out. we'll keep an eye on it but let's get right to it now with today's panel. joining me is susan ots from the oshman institute, zachary carroll of evest net and cnbc contributor sara eisen and kayla tausc tausche, and also "fast money" trader jon najarian. good to see everybody. dr. j., the russell rebal, is this mostly priced in? >> well, i don't know a lot of folks that are trading that, kell, but i'll tell you, for the week there were lots of movements, quite large movements. 3d printers, broadcasters. of course, broadcasters reacting to that supreme court ruling that you and i talked about two days ago. >> yep. >> those stocks were just on fire after that, and had he theld most of those big gains. so, a very active week for trade, kell, and next week, although it will be shortened, most of the activity will probably be monday, tuesday, wednesday. by wednesday afternoon, it will be a ghost town.
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>> yeah, it's going to be a packed week for economic data. and guys, monday the 30th closes out the second quarter. it closes out the first half of the year. kay kayla, what have we learned? >> i don't think we've learned all that much. people have been nay saying, they've been saying the data would not be good, and sure, the data wasn't good when you think about the first quarter, but people have been buying anyway. and i think in addition to the rebalancing, we have a little bit of profit taking, but you also have a little bit of window dressing, some investors that maybe haven't bought the market before that are using now as a time to get in. >> and zach, what about the rebalancing effect not of the russell, but of a lot of pension funds, who at the end of the quarter, is this not probably going to be the case, right? they're marked up a little bit on the equity side and perhaps the rotation to what, fixed income? >> they only do that if they have an automatic allocation that says they're run and they have to reallocate into fixed income. we're finishing another week and probably finishing another quarter of just amazing volatility in the markets, up and down. no. i mean, this is a period of time
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where, you know, we keep expecting that shoe to drop, keep expecting something to puncture it, whether it's crisis in iraq, whether it's a negative 2.9% reading on gdp, which two years ago i think would have created, you know, extreme market anxiety -- >> dislocations, yeah. >> and i think, you know, there are two options here. one, we're complacent because we're overly complacent, and two, we're complacent because there are reasons to be complacent. i'm certainly in the latter camp, but we'll continue to have this debate over what looks to be a relatively complacent summer. >> sara? >> on that note, techniciit is to watch the equity market, the most hated rally we have. it speaks to the sent meat out there. kayla mentioned the economic data. we were talking about the economic surprise index tracked by citigroup, which measured lower. and they measure data releases relative to the expectation on wall street, and we're back to may levels. so, some disappointments on the economic data thinking about personal spending yesterday. and yet, the market continues to
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march higher, which is a completely different story than what we saw this week for the bond market, where you just see money continuing to pour into treasuries. 251 i think is where the ten-year yield settled, a three-year low. you continue to see this appetite. >> and there was a great article earlier this week, mcintosh was saying there are few periods in history where there is no way you can lose money. basically, everything you put your money in, it's going up. this is one of those quarters. >> and those always end so well, susan, don't they? >> death now to me. i'm not so concerned with where we are right now, to be honest. i think the consumer sentiment and confidence numbers this week were both good and above estimates, where people are talking about buying large appliances and cars and houses, and that's going to spur the economy in the way we want to see, so i'm less pessimistic than others are from that gdp number. >> i don't have any particular pessimism in that i don't think there should have ever been an expectation that this was going to be an incredible economy.
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expectations of 3% growth were much more hope-based than reality-baylessed. the fact is, we'll probably have an economy between 2% and 3%, whatever that means, and that matter doesn't matter a whole lot to these companies. because amazon can do really badly because it's taking share. >> so, you don't care about the quality of earnings? it is an interesting debate right now, right? because the earnings are better and profit margins stay high, but the quality in terms of revenue growth and guidance isn't that great. >> i think we haven't had great revenue growth for years. we have companies learning to be more efficient with technology, learning how to be more efficient with the goods and services they offer, and that is a kind of quality. it certainly is not what people think of when they think of quality earnings. >> so, question is, while i thought this was revealing talking about viacom last hour, the guest we were talking to, david nelson of bellpointe, pointed out that this company, as he put it, is effectively going private because they bought back 30% of the float. that's an important component, dr. j., of the market here as well. >> absolutely, kell. and an awful lot of these companies have not bought 30% of
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their stock but have bought billions and billions of dollars worth of stock as part of share buybacks. so, obviously, you're a share shrinker when you're in that category, and that's a lot of the kind of stocks i look for. i'm going to be looking for some sort of washout in these refiners, kelly. i don't think we've got there yet, but they did have a virtual monopoly on u.s. crude oil. of course, it could not be shipped out. it's not being shipped out yet, but soon it will be in all likelihood. and i think that continues to pressure these guys. but i think another 10% to the down side would be my target before i invest. >> well, that's interesting, because again, you know, we saw what happened with valero and some of the others the day that news, which was news, even if the administration saying it wasn't news, it was news. and the real important thing that happens from here, i guess, is whether or not that's the opening of some more significant loosening of export policy, dr. j. so, our guest last hour seemed to think yes. i'm hearing from you, it sounds like yes. how do you think these refiners
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respond? >> i think the refiners, like i say, it's become a lot more competitive for them then. look at marathon today. it's, like you say, not just valero. they're the biggest, but then you look at marathon, philips 66, you look across the board at all the different refiners. instead of just getting that, not free, but that very low competition trade out of the bocken and marcellus as well as texas and louisiana light sweet, i think they have more competition from outside our borders that's not here yet, i'm not saying it's here yet, but it is coming, and investors are already ratcheting down their outlook as far aprofitability for the refiners. >> in the meantime, even as the energy piece is one side of it, we'll get auto sales next week. it indicates, susan, like you were saying, to what extent are u.s. consumers, to bring it back to the consumer here, able and willing to buy big-ticket goods? >> well, you know, we're starting to see an increase in
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credit card debt. we're starting to see loosening of some credit standards. and so, you're starting to see, i think, people starting to borrow more and moving more in that direction. it still hasn't hit, obviously, levels precise, but i think some of that is going to start to pick up again. whether or not that's a good trend, you can kind of decide. maybe bad for individuals, good for the economy, and we'll have to find the right balance, but i do think there are positive signs on the horizon in that respect. >> not to play devil's advocate, and i think that's kind of the environment we're in. for every positive data point you can find a negative one right now as well. interesting chart circling from yield data. renaissance macro, an economist looked at spending on big-ticket items versus just food and clothi clothing, the basics, and they're spending more on cars than the food and basics. and it speaks to this discrepancy that you've been seen in the consumer spending recovery, and that is more expensive items at the higher income level. much better recovery than what you're seeing at the low-end basics and consumer staples. you see it in their earnings
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reports. >> and the only cautionary piece of this, perhaps, kayla is, whether it's a rerun of the subprime housing crisis we saw in the past, but perhaps this time with regard to autos, there's a lot of subprime auto refinancing activity going on today. the housing data today shows it's encouraging because it shows it's not just in the auto space. >> jim cramer will always say, someone about pay off their car before their morning because they can live in their car, but they can't drive their house to work. >> as jim knows firsthand, right? >> yes. >> and without the derivatives being piled on those subprime -- if it had just been a subprime morning issue, 2007-2008, we would have had a dent to our economic growth and people would have been in a world of pain. it would not have imperiled the whole financial system. unless there is massive pressure piled on student loans and auto loans, which to our knowledge is not, you're not in the same systemic danger. >> the structure of the subprime auto loans is not as alarming as
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the mortgage loans were. these were not interest-only loans, they were not ramping up over time. it's simply people whose credit scores have been dinged over the past few years -- >> lower than they have. >> and they're not dipping down the scale -- >> nor are they being repacked into aaa securities because the bulk of them -- >> at least not yet. >> as far as we know. i'm like, let me google that. dr. j., before you go, payrolls next thursday. how do you think the market's positioned for it? >> i think overall, the market's in fine shape right here going into that. now, we could get a surprise on thursday. we, of course, get the adp just 24 hours ahead instead of 48 hours ahead like we usually do, but i'm optimistic about how that will be, and i think the gdp ticked this week. i'll bet zach has some thoughts on it. i think that's the low we're going to see in almost forever out of the united states. >> dr. j., thank you for now. great to see you. stick around and catch jon najarian and the "fast money"
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crew at 5:00 p.m. they're going to be talking the amazon fresh expansion across the u.s. in which grocery stores are going to fall victim to the delivery service. don't miss a moment of that. let's send it now to dominic chu for a quick "market flash." >> so, kelly, what we're seeing right now is a big drop during the regular session in shares of mankind after the food and drug administration approved the company's inhaleable insulin product, afriza. it calls for more tests. mankind must run additional clinical trials on its efficacy or effectiveness with children and evaluate its impact on possible functions in the cardiovascular system. shares sank before rebounding to close out down about 5% as investors basically looked to evaluate the conditions of the approval. there's probably also some kind of a contingency there to put warning labels on the labelling of the product. so, again, some interesting devel developments for mankind, a stock that was down 22% in the regular session, kelly.
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back to you. >> dom, thank you. so, it's been a tough first half of the year for financials, significantly underperforming the s&p in 2014 to date, but will this lagger become a leader in the second half? that's coming up. also, the amazon way. up next, we'll hear from a former amazon executive on how jeff bezos's leadership style has turned this company from an internetbook-seller into one of the largest tech and retail companies on the planet. and don't miss "amazon rising," an inside look at the company's success, airing sunday night, 9:00 p.m. eastern. you're watching cnbc, first in business worldwide.
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welcome back. here's a look at the volume as we headed into the close and then just on the closing bell, the russell rebound seeing a significant uptick. art cashin informing us about $900 million of buy orders were in there. bob pisani joins us now with the details. bob? >> you know, here's what's amazing. we sit on the floor, we watch what's going on, it all seems kind of quiet. we traded 1 billion shares, 1 billion shares in the final ten minutes of trading between 3:50 and 4:00. and after that, there's a few minutes where it all settles out. but a billion shares went through the pipes. and i don't mean all over, i mean just on the floor of the
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new york stock exchange. that's an awful lot to put through the pipes, awful lot of stress on the system. but as far as we can see, and i've been walking around looking to see if there's any issues or problems, it's about as flawless as you could have expected. a few minor things happened, but by and large, this went well. this is the biggest close of the year for the nyse, so they spend a lot of time preparing for it, making sure it goes smoothly. so far from what i can see, very, very smooth. kelly, back to you. >> bob, as mentioned, perhaps, starting to turn stocks around in the close. have a good weekend. amazon, one of the world's most innovative companies. now a former executive dishing. all the details about the company in a new book. john rothman spent years working at amazon with jeff bezos, author of "the amazon way." good to see you. >> thank you for having me. >> there's a lot about amazon, david faber's report coming up. i've got "the economist" last week, where the cover and the question it poses is how far will amazon go.
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how would you answer that? >> can you restate that again? >> how far will amazon go? they show a man on a moon with an amazon delivery box. >> yeah, i would never underestimate their ambition. you know, they started as an internetbook-seller to the world's largest selection and e-commerce company, now are in the technology sector and are really looking to reshape many industries. >> could you give us a sense from your experience there as to what other industries could fall under amazon's purview or what this company, which again, began as amazon.com, selling books, will look like if jeff bezos's ultimate vision is executed? >> yeah, i think that they really look at industries and look at where, you know, the customer experience could be radically improved, where there's opportunity for digital disruption and how it can value their customer base. and then they're willing to explore into those areas. and so, you've seen it in
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technology. they're the leader in cloud computing. you've seen it in the publishing industry. you see it in grocery, you see it in apparel. i think they'll continue to explore new industries and new functions. >> and i want to just get perspective from the panel here. susan? >> so, john, my question is, when you look at amazon and you look at the dominance they have globally, how can you really say jeff bezos is a paragon of leadership or holding himself out to be one when we're hearing all these terrible stories about the conditions in their warehouses, that people are working this sort of back-breaking labor, you know, they're not getting enough time off, they're getting fired if they get sick? it really feels like those two are kind of incongruous. >> you know, i know that amazon is highly committed to meeting all of the standards that, you know, are set and are an incredible corporate citizen. so i can't comment deeply on the issues that are going on within their fulfillment centers, but i
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know it's an incredibly well run company, and it's competitive. and they compete on margins. so, they are always looking for how to do things more efficiently. >> so, on that, you know, there's the old apple way, which is this very closed system, where everything flows through it, as opposed to a more open architecture, you know, which is obviously the google/android way. where do you see amazon coming down on that in terms of its entire business model? >> yeah, i'd say more on the open side. they view themselves as a platform company. and so, the platform company exposes services, allows others to innovate on top of their capabilities. and amazon the retailer is one of the big customers of that platform company, but lots of other companies can leverage their capabilities into new and innovative ways, which i think is really the definition of a platform company. >> john, we've got to go, but does this company deserve to be trading at the valuation it is?
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>> yeah, i think it's a great long bet, and again, i think they have incredible ambition and they are excellent at execution. >> all right, john rossman knows quite a bit about the amazon way. thank you, john, this afternoon. appreciate it. >> thanks for your time. we've got a news alert for you now on blackrock. dominic chu, what can you tell us? >> all right, so, kelly, here's what's going on. blackrock advisers, which is a subsidiary of the big asset management firm blackrock, has received a wells notice from the securities and exchange commission, the s.e.c., and what this wells notice is, is in essence a heads-up of a possible further action by the s.e.c. it's in relation to a former employee of blackrock advisers, a man named dan rice, a portfolio manager for one of the firm's funds. there was a potential conflict of interest inquiry back a couple years back in 2012. the employee, dan rice, no longer works there and hasn't since december of 2012, but the s.e.c. staff has taken the
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preliminary view that blockrock advisers' disclosure as it related to this whole investigation situation was inadequa inadequate. now, again, this is a wells notice. this is not a formal allegation or any kind of a finding of wrongdoing, a heads-up, if you will, about a possible situation. so, we'll bring you more details, but for right now, the shares are down, but they're down marginally in the after-hours session. so, again, a wells notice served for blackrock advisers, a subsidiary of the bigger blackrock organization overall, kelly. back over to you. >> all right, dom, thanks very much. more still to come on amazon. we'll talk to bill miller about it. he's one of the company's biggest bulls. >> the sales growth will be probably 20%, 25% the next few years and the stock should at least double in that time. >> he called it the best run company in the world right here on the "closing bell," but is it his top stock pick? he'll join us in a few minutes.
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and don't miss "amazon ridsing" sunday night at 9:00. learn how jeff bezos created one of the most powerful. (horn, ding, ding) how long have i had my car insurance? i don't know, eight, ten years. i couldn't tell you but things were a lot less expensive back then. if you're 50 or over you should take a new look at your auto insurance. you may be overpaying. actually that makes a lot of sense. old policy. old rates. and thanks to your experience behind the wheel, you might save $404
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showing strength across all u.s. districts. investment interests as m&a's close. costs will rise. bond trading weak and the they may charge banks for the $2.6 trillion in excess reserves. bnp paribas and others could pay to settle legal issues. that's the second half outlook. >> kayla also on the panel with us. rich peterson mentioned that the outlook for second-quarter earnings is for 6% growth or 6.5% growth overall but 8% when you strip out the financials. in other words, they're under pressure here. >> they're dragging down almost the entire economy right now. the wonders of live television. we can be there, we can be here, we can be all these places at once. >> beam you around. >> but the point being, everyone thought banks were really going to be benefiting from a rise in yields as the economy starts healing, but bonds have just basically been trading sideways.
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and remember, the bulk of their earnings are in interest on loans to consumers and to businesses, so the longer yields stay low, the more the banks will make, not to mention these amazing legal settlements that keep coming in the tens of billions of dollars. >> and now the problem is that they're starting to really keep chasing the yields and we're seeing an erosion of credit standards. the eoc came out with a report this week saying they're getting concerned about the accumulation of credit risk and how much we're pushing into subprime borrowers. we were talking earlier in the show about subprime in credit cards, and 40% increase in issuance to subprime borrowers on credit cards in the first quarter of this year versus last year. so, definitely some storm clouds on the hoarrizon. >> there is issues about the credit card of commercial loans some of the commercial loans will be going sour. the flip side is there are a lot of people still saying they can't get credit when they want credit. it speaks more to a confused system than one that's necessarily running away -- >> most companies can get
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credit, consumers cannot. the loan demand is picking up, though, where analysts are saying you could see a boost to the bottom line for the banks. >> and regulatory, you mentioned the legal fees, the regulatory overhang seems to continue, even with today's news on bnp pari s paribas, they're approaching these cases more from a criminal perspective versus, you know, a civil perspective. yes, it's not related to the financial crisis, but it certainly puts banks in the hot seat. >> and we knew the residential fraud, the mortgage securities working group that eric holder has been spearheading, we knew that there was more to come from that group. but now that we're seeing a guilty plea from bnp paribas, from credit suisse on all of these other seemingly unrelated issues makes banks here, executives are saying is this a dry run to see if in the future we can get a u.s. bank to plead guilty on some of these? >> it was only a decade ago that the very notion of a criminal, what would we call it, i mean, of criminal activity could take a firm down. and now it seems like it's routine for international banks.
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>> and that's what u.s. banks have said they have long told the federal authorities. look, we can't plead guilty, we can only settle for as large a sum as you want, but our customers won't do business with us if you make us do this. but now that they're actually getting credit suisse to do this and getting bnp, and there haven't been that many widespread effects -- >> the skies haven't fallen. >> right. >> makes you think how this could play out domestically going forward, but that's not going to happen in the next half. that's longer term, just a seed that's being sewn. >> which won't make the executives feel any better. but thank you, kayla. hillary clinton is the presumed democratic front-runner for president in 2016, but is she out of touch with americans? she recently implied she is not truly well off, although her family has gotten millions in speaking engagement. david gregory just interviewed former president bill clinton, and he has highlights next. then, hitting the road with the ceo of thor industries, one of the largest rv-makers. that's right outside the stock exchange right now. see if he's seeing a pickup in
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who maybe just pay taxes on capital gains. can you see that as a political matter it may strike people as being out of touch? >> yeah, but she's not out of touch and she advocated and worked as a senator for things that were good for ordinary people. and before that, all her life, and the people asking her questions should put this in to some sort of context. i remember when we were in law school. she was out trying to get legal assistance for poor people. i remember she was working on trying to, believing in paid leave for pregnant mothers in the 1970s. see, so i think, if you don't give the most adept answer to a question because you immediately remember what you felt like the day we left as opposed to what it looks like to everybody else now who's having trouble, you can say, okay, i've got to clean that up, which she did.
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>> that was "meet the press" moderator david gregory sitting down with former president bill clinton. his wife, former secretary of state hillary clinton, under the political microscope as she's expected to announce her intent to run for president in 2016. david gregory joins me now with more. david, that was a little bit of a cringe-worthy moment. there's bill clinton on stage, his wife, his daughter sitting there. he's talking about her. and by the way, he seemed to almost indicate that she wasn't being very adept, in his words. >> well, what he was saying is as a political matter, yeah, she had to go and clean up the comment that she made initially that they were dead broke coming out of the white house. what has struck me about this at the time i did the interview and as i've thought about it this week is that the clintons seem somewhat unprepared for this line of questioning about kind of who they are, how wealthy they are today. it is a different thing in their public life than where they started, but it is their reality today. the other reality today is that in politics, if you are an establishment entrenched politician, if you're a democrat
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or you're a republican, there's a lot of people who are angry at you who don't think that you're listening to them. and that's a bipartisan problem that the parties have. and so, for hillary clinton, she is a much different person in terms of how wealthy she is than when she got into public life with her husband way back in the '70s, as he talked about, and i think she's not been as adept talking about that so far. the former president defended her. she came out in the next couple days and said i don't need him to defend my record. >> right. >> but the reality is it's part of how they're going to be scrutinized, who are they are and can they still stand up for these issues at a time of low wages, at a time of income inequality, when a lot of people within the democratic party are saying, you know, who are feeling more of that populist streak. >> and the contrast with elizabeth warren right now couldn't be greater. at the same time, just hillary clinton's remarks alone on the heels of mitt romney's defeat last time around because he seemed to be "out of touch" with
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the way about these issues about his income and wealth were perceived is extraordinary. how much damage has been done to the ability of folks, do you think, to nominate a hillary clinton, to vote for a hillary clinton for president this week alone? >> well, let's just remember that it's june of 2014, and 2016's a long way away. she's not even a declared candidate. but because of who she is, because she's written a book, because of the sort of expectation of her candidacy and how long she's been in public life and what a long record they both have, she's going to get this kind of scrutiny. the president said, president clinton said, look, people don't begrudge you if you're rich. they just want you to be transapparent. i would add on to that, they don't mind if you're wealthy, so long as you can really connect with them. and it's that connection piece people are sort of asking about all politicians, including the clintons, and that's where it's kind of a new game. you know, for the clintons at this stage of their life, getting into the potential of another run. >> and this is the likability piece. the other piece is how effective
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she is, how effective she has been, her track record, especially as secretary of state. coming under plenty of strutny of its own. and look, i take your point, it's mid-2014, perhaps we're dwelling far too much on this right now, but how much, especially after the midterms when they were likely to deliver a more gop-heavy congress, how likely is it that that momentum could carry forward and put a member of the gop in the white house in 2016? >> well, we're a long ways off, and the republican party is pretty divided right now. hillary clinton is still a very formidable force politically within her party and more broadly, but i think that some of these questions speak to whether or not she could have more of a challenge on her left than people are giving much credit to at the moment. because she has the potential to raise the money she can raise and because of her name recognition, she becomes this favorite. again, i think she'll be running against somebody. it's very hard to paint a contrast when you don't know who is on the other side. and at the moment, the republicans have a lot of division that they've got to get
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through before they can start thinking about who's going to carry the banner for 2016. >> yeah, sure. and now it appears perhaps more division on the "d" side of things as well than previously thought. david, thank you for now. good to see you. be sure to tune in to "meet the press" this sunday. you can catch the whole interview david has with former president bill clinton from cgi. check your local listings for show time. now, art cashin's concerns about the second quarter all the rage on wall street today. is he topping the cnbc hot list? that's up next. and also ahead, bill miller here to tell us why he thinks amazon shares could double over the next several years. we'll be right back.
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school's out for summer. while many mba grads are looking for jobs, many aren't even applying for financial positions. allen wastler has that in the "hot list." >> that's our number one story. it's right up from stephanie landsman, one of our producers. she looked at what the mba market is doing right now, and it's two-fold. because of the recent troubles on wall street, with banks getting into ethics issues, things like that, mbas aren't so anxious to go to wall street, and in fact, with all the success of new companies like the googles and teslas of this world, they're finding that there's actually a market for them beyond. and so, this is sort of making the talent pool shrink for wall street a little bit. really fascinating story. >> oh, yeah. >> number two on the hot list is everett rosenfeld, one of our
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hard-working news associates around here, managed to get the numbers finally from espn for the number of streams that they did. >> oh, nice. >> 3.2 million streams they had. now, admittedadmittedly, the se crashed briefly, but they got back up. as someone in the streaming business from time to time, i'm kind of jealous. >> raising eyebrows. >> of course, they have a great soccer match, i have fed hearings. okay. finally, number three on the hot list you were just talking about, our write-up of what was originally covered by the "new york post," the book "blood feud" and reportedly hillary making comments about president obama, mainly that he was incompetent and feckless. that's according to the book and according to an anonymous source, apparently she was out drinking with friends and got loose lippy there. anyway, that's our number three. pretty hot "hot list" today, even for a friday afternoon. >> i was going say, thank you, allen.
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great to see you. have a great weekend. >> take care, kelly. by the way, this is the case for disney. espn being a core part of that, what was it? 3.4 million people watching that online, even though it admittedly did crash. >> it's interesting to see soccer explode in this country. it was never a popular sport. actually we've been covering nike and adidas and what we saw out of nike earnings last night, they're relying on the global football market. >> football is very popular. soccer was very popular in 2002 when the u.s. did well in the world cup and they fell. one thing on "hot list," good thing mbas are not rushing into the wall street market. there is a world of need for confident talent and entrepreneurial people, the degree to which they pooled into wall street in the 2000s was distorted and i think very good for the economic outlook. >> morgan stanley put out a memo, bloomberg picked it up, the ceo saying they got 90,000 applications for the summer
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internship and accepted roughly 1% of them. that's harder to get into than any ivy league school. clearly, the banks are saying we have no issues in attracting people. >> i agree with you, but for a different reason. i think it's great there are fewer mbas going into finance because then you weed out the people that are mercenaries and going for a big paycheck and get people who believe in the industry -- >> no, they know the big paycheck is in tech. >> but it's not an entry-level. >> it will help the banks get their cultures back in shape. >> or the expenses down. >> that was the cap half full and the cap half empty in one brief second. >> that's how we do it at the kk kk. last time with talked to bill miller, he said amazon was one of the best out there. take a list wren. >> i think amazon has a small market share in a giant global market, it has a sustainable competitive balance in cost and consumer loyalty. it's got a ceo, jeff bezos, who is brilliant, who is relentless and whose wholly rational, and that's a deadly combination.
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>> is he still bullish on the business? back with us exclusively is legg mason chairman and ceo bill miller on the cnbc news line. bill, it is great to talk to you again, and at a time when people are looking at amazon wonderi i if it's broken because of the performance in the first half of the year. are you still positive on this name? >> yeah, kelly, i think it's one of the best names in the overall market. and if you'd ask me if i could only put my money in one spot for the next ten years, it would probably be amazon. what you quoted in the earlier segment is still true about amazon, but i think what people may be missing about this is just how large their sustainable competitive advantage is. so, if you compare them to walmart, the most efficient retailer in the world, amazon has about 117,000 employees on about $100 billion of revs in the next year and a half. walmart has 2.2 million employees. amazon employers are about four times as productive as walmart employees and profit margins are
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about 400 basis points greater than walmart's, so an enormous competitive advantage. they're taking the gross profits and investing them for growth. >> i'll read a line from the "economist" piece on this, where a week or so ago, they put this on their cover. they say to your point about comparing it with walmart, even after this recent slump, shares still cost more than 500 times last year's earnings. that's 34 times the multiple for walmart. so, what do you say to those, bill, who say this company is and always has been ridiculously overvalued? >> well, it's gone from about, i don't know, from maybe $1.50 or $2 max when it came public to $300? so, about 150 times your money. i think the market has, it's been 17 years, the market has had plenty of time to assess amazon, and the market -- what i find interesting is that people somehow say amazon gets a pass in profits. well, it would be quite extraordinary for the market to pick just one company and say for all the thousands of companies we're going to pay attention to profits, but this
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one we're not going to. what the market actually is, is very rational. amazon is a lot like telecommunications inc. under john malone. so, if you bought that when john took over and he sold it to at&t, you made 900 times your money over that 25-year span. and they almost never reported a profit in that entire period. all that happened was the debt went up and the stock went up. but he's actually creating enormous amounts of value, which is what's going on with amazon. >> do you, and do you have to as an investor, understand everything that jeff bezos is up to and the wide array of industries that he's experimenting with in order to understand the value of this name? >> i think it's really important to understand jeff's psychology, decision-making approach, how he thinks about the world, because ultimately, what's going to happen is all the capital that's being deployed is being deployed based on his vision. but fortunately, we have, as 17 years as a public company, to get a sense of how that previously has worked out. and what we can see there is
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that the capital deployment has really been quite amazing. and we did a mathematical analysis, a regression analysis of what actually the best predictor of amazon stock price is, and it's obviously not profits, reported profits, because that only is about a 0.2% correlation co-efficient. it is, though, it is gross profit dollars, though. that's the key. and gross profit dollars last quarter actually accelerated to a 31% growth rate. so, if that relationship holds without getting too math speaky here, if it's got a 0.96 correlation, which means it explains almost all of amazon's stock price growth. if that correlation continues to hold, then the future's very, very bright for amazon over the next year or so. >> in other words, we have to go, but do you think investors have paid too much attention to ratios and not enough attention to the, as you said, the gross profit dollar, that a 20-year-old company like amazon is still growing 31% in the past year? >> amazon i think will be the fastest company in world history to $100 billion of revenue
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growth. in 17 years, about $100 billion, probably sometime late this year, early next year. it took walmart, one of the fastest growing retailers in history double that amount of time to reach that. ibm's been around 100 years. amazon will probably pass them in revenues next year. so, i wouldn't say so much -- you hit a good point about profits versus ratios, to clay christensen's point, but i would just say people are focused on the wrong numbers at amazon. they should be focused on the gross profit growth and sales growth. >> bill, fascinating and another thing for people to think about as they get ready for the documentary coming up this weekend with david faber. bill miller of legg mason. have a good weekend. recalls have taken center stage for the gm industry this year. what will drive the industry for the second half? phil lebeau is here to tell us. and what rv sales are saying about the state of the consumer, coming up with the ceo of thor industries, when we come back. she keeps you on your toes.
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welcome back. we start with dominic chu. >> well, morgan stanley, right now -- mankind shares, up about 3 or 4% now. up to like $10.37 right now. this was on news that they have received approval on a product but with conditions. looks like investors have seen this and it's now an approved
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drug with the fda. the shares gaining much back of the losses we saw. >> let's continue to look at the second half of the year. phil lebeau with auto makers and sales. >> general motors is expected to see the pace of resales go down. meanwhile, investors will be focused on the sale of fiat. and a year-end total coming in above 16 million vehicles. that's the look at the auto sector.
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exchan exchange. thor industries, joining us now to talk about this is bob martin, the ceo. great to see you. >> thank you. >> how much does this retail for? >> it's very affordable for a complete rv. >> how many are you selling in this country? >> well, we had to open up a new factory, so hundreds of thousands as we continue through this year. >> and people living in the rv communities. >> well, we definitely sell to the baby boomer community, but a lot of our products are going to
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the mill lennials to gen x. >> how are you seeing customers finance these purchases? >> in the last four years retail financing has come back strong. but they need a good credit score, and 15% to 20% money down. pre-recession, they didn't. they need to have money down, but long term, they will
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actually have equity in their rv. >> and how is this a good investment for those trying to finance it? >> well, an investment into your family, your health. it does depreciate like a car. but you can finance it for longer terms as well. >> are you seeing it higher-end stuff, or more to the middle? >> right now, motor home growth has come back stronger, 20%, 30% in the last couple of years. but right out of the recession -- >> this thing is huge. how long does it take to manufacture. >> about a day, this one. >> what's your sense of american
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manufactu manufacturing. >> in ten seconds. >> we're building in elkhart, indiana, and we have high confidence. >> i'm going to take this home. thank you, everybody. time for "fast money" with melissa lee. over to you guys. it's "fast money." apple fire sale. find out why they're cutting prices and making friends with costco. and the energy fade. falling

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